You are here

Rep. Maloney on the Skyrocketing Cost of Oil

Jun 24, 2008

Press Release

WASHINGTON, DC – Congresswoman Carolyn B. Maloney (D-NY), Vice Chair of the Joint Economic Committee (JEC), delivered the following prepared remarks at today’s JEC hearing, “Is the Skyrocketing Price of Oil a Bubble or a New Reality for the U.S. Economy?”:

“Good morning. I would like to thank Chairman Schumer for holding this timely hearing to examine the global energy markets and the impact of sustained high oil prices on the U.S. economy.

“Just a few months ago, it was shocking to see oil rise above $100 a barrel. Now, it’s trading at record highs above $138 per barrel – double the price from last year. Consumers are feeling the pinch on their pocketbooks whether it’s paying over $ 4 a gallon at the pump or seeing higher grocery bills as rising fuel costs drive up food prices.

“The question on the minds of all Americans is – are high oil and gas prices here to stay?
Many energy analysts believe that a large part of the recent rise in oil prices has been caused by increased demand in developing countries, such as China and India. Oil prices are expected to rise alongside the expansion of these countries over the long-term.

“In the short-term, the economic downturn here in the U.S. and the weak dollar have also contributed to rising oil prices. The Federal Reserve has lowered its target rate to 2.0 percent, which has led to a fall in the dollar, relative to other currencies. Instead of seeking the safe haven of U.S. Treasury Bills, investors have been looking to commodities – including oil – as a hedge against inflation, thereby driving up prices. As our witness Daniel Yergin puts it, oil has become “the new gold.”

“Financial markets and oil markets have become intertwined as never before. As the amount of non-commercial trading of oil has increased, Congress must scrutinize how much of the run up in oil prices is due to speculative manipulation. One potential way to deter speculators from driving up prices is H.R. 6264 – a bill proposed by Rep. John Larson, that I have co-sponsored, to prohibit anyone without the ability to actually accept delivery of crude oil from buying a futures contract.

“Americans are paying a hefty price for the Bush Administration’s failure to pursue a sensible energy strategy over the past seven years. Meeting the energy needs of our nation will require achieving greater efficiency and investing more in renewable fuels. We cannot drill our way out of this problem, as the Administration and my colleagues on the other side of the aisle would have us believe.

“The United States has less than 2 percent of the world’s oil supply, but we currently use 24 percent. Drilling in the Arctic National Wildlife Refuge would not yield oil for 10 years and at it’s peak production in 22 years, it would only save consumers about 2 cents a gallon on gas.

“Drilling on the outer continental shelf would have an “insignificant” impact on oil prices at peak production, according to the Energy Information Administration. Oil companies already have 68 million acres of federal oil reserves leased for development, and the House will soon take up legislation (H.R. 6251) that will require oil companies to use those leases – or lose them.

“We are building on steps the Democratic-led Congress has already taken to lower oil prices and reduce our dependency on oil by expanding tax incentives for renewable energy and creating green jobs to spur American innovation and business investment.

“The Energy Bill signed into law in December included provisions to combat oil market manipulation and increase vehicle fuel efficiency to 35 miles per gallon in 2020 – the first Congressional increase in more than three decades. This spring, we suspended the Strategic Petroleum Reserve, which will put more oil on the market and help drive down gasoline prices. And we have overridden the President’s veto of the new Farm Bill, which makes a historic commitment to more affordable homegrown American biofuels and increases Commodity Futures Trading Commission authority to detect and prevent manipulation of energy prices.

“Congress continues the fight to bring down the price of gas and make America more energy independent. Our nation’s continued prosperity depends on meeting the challenge of our energy needs and bringing relief to American families.

“Mr. Chairman, thank you for holding this hearing and I look forward to the testimony today.”